John Whelan: LEOs urged to get more small business exporting
"A state-owned export/import bank has been the solution in the US, why not here,"Â asks John Whelan. Pic: David Creedon
There is a strange dichotomy between the rampant export growth of our large companies and the low level of export activity among our small companies.
The debate about Ireland’s economic outperformance flared up again after Ireland’s Central Statistics Office (CSO) published its 2022 growth estimate of 12.2% for the economy last month, the highest in the OECD club of rich nations and single-handedly preventing the eurozone economy from stagnating in the final three months of last year.
Critics say Ireland’s economic performance is distorted by the export activity of large US multinational groups capitalising on low Irish tax rates, with Nobel-prize winning economist Paul Krugman adding to the debate by dubbing this stellar growth as “leprechaun economics”.
This is of course simplistic and insulting to Ireland’s very successful trade policies over the past number of years, but it highlights the over dependence on a limited number of large companies attracted to Ireland since the 1950’s which are responsible for the bulk of Irish exports.
The Government for some years now has recognised an urgent need to stimulate more exporting in the SME population but has not managed to create the right model to entice more small business owners to expand intentionally.
Following a range of policy reviews and a series of strategy moves by Enterprise Ireland, the Government has decided to extend the mandate of the Local Enterprise Offices (LEOs) to target new exporters and provide direct grants to firms who employ 10 to 50 employees in the manufacturing and internationally traded services sectors.
Local Enterprise Week 2023, taking place for five days from March 6 with a series of local business events and initiatives scheduled to take place, is expected to showcase the extended range of export supports for micro employers.
Encouraging more small business to take the risk, jump on a plane, find a new customer, and build overseas sales is challenging at the best of times. But getting 2,000 new businesses to do this by the end of next year in the current economic turmoil, as taken on board by Enterprise Ireland in its 2024 strategy, is challenging to say the least.
Even more ambitious is the target set by LEOs around the country to make a further 3,750 small and micro business exporters by 2024.
Enterprise Ireland state they have added a dedicated development advisor to the South Region team, for example, to work directly with those companies to drive new growth through developing ambitious exporting strategies and bolstering management capability. But is this enough?
Despite new initiatives by government, more could be done to raise export ambition in small business owners. Access to low-cost finance continues to be a blocking point for many small businesses, who look at the longer credit payment times on overseas sales, or an extended delay in getting paid — pushing their cashflow to critical point and threatening their domestic business.
Many countries across the globe give businesses export credit guarantees to cover the risk of non-payment by overseas customers, but the Irish government, despite many pleas from industry, continues to ignore this key incentive to draw more small business into exporting. A state-owned export/import bank has been the solution in the US, why not here?
